Microsoft Advances Xbox Live Video Ambitions

It could be a December to remember for Microsoft (NAS: MSFT) , which is expected this week to activate recently announced support for programming from Verizon Communications (NYS: VZ) , Comcast (NAS: CMCSA) and HBO to be delivered over the Xbox video game platform.

The software giant also will begin rolling out upgrades to its Xbox Live service that will include new functional features like voice-based and hand-gesture-based navigation and content search through Microsoft Kinect.

The evolution of the Microsoft Xbox as a cable TV set-top box received a major boost with the Comcast, Verizon and HBO partnerships, which built on Microsoft's previous arrangements with video programming providers Netflix (NAS: NFLX) and Hulu. With 35 million subscribers to its Xbox Live service, Microsoft is now being viewed as a juggernaut in the video service provider realm that may have the potential to drive a new round of pay TV cord-cutting.

Yet, with its new pay TV tie-ins and its own $60 pay subscription service for the Xbox, it is difficult to see Xbox Live truly usurping the cable TV crowd. In addition, Xbox Live still suffers from the same shortage of broadcast content that affects other pay TV alternatives. Along with this week's news, there are reports that Microsoft will not launch with as much content from its new partners as had been expected.

It is far too early to declare the death of pay TV at the hands of Xbox Live, and Microsoft and its provider partners have thus far been careful about positioning the platform as a secondary TV set-top box, rather than the primary living room unit.

However, it may not be too early to say that Kinect-based TV navigation could hasten the retirement of traditional TV remote controls. The Kinect capabilities will connect will an upgraded programming index on Xbox Live that also will be searchable by Microsoft's Bing search engine. Microsoft held a demonstration of voice-based programming search and other new Xbox Live capabilities last week.

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